IRS: Sorry, but It’s Just Easier and Cheaper to Audit the Poor

IRS: Sorry, but It’s Just Easier and Cheaper to Audit the Poor

Video Courtesy of CNN Business


The IRS audits the working poor at about the same rate as the wealthiest 1%. Now, in response to questions from a U.S. senator, the IRS has acknowledged that’s true but professes it can’t change anything unless it is given more money.

ProPublica reported the disproportionate audit focus on lower-income families in April. Lawmakers confronted IRS Commissioner Charles Rettig about the emphasis, citing our stories, and Sen. Ron Wyden, D-Ore., asked Rettig for a plan to fix the imbalance. Rettig readily agreed.

Last month, Rettig replied with a report, but it said the IRS has no plan and won’t have one until Congress agrees to restore the funding it slashed from the agency over the past nine years — something lawmakers have shown little inclination to do.

On the one hand, the IRS said, auditing poor taxpayers is a lot easier: The agency uses relatively low-level employees to audit returns for low-income taxpayers who claim the earned income tax credit. The audits — of which there were about 380,000 last year, accounting for 39% of the total the IRS conducted — are done by mail and don’t take too much staff time, either. They are “the most efficient use of available IRS examination resources,” Rettig’s report says.

On the other hand, auditing the rich is hard. It takes senior auditors hours upon hours to complete an exam. What’s more, the letter says, “the rate of attrition is significantly higher among these more experienced examiners.” As a result, the budget cuts have hit this part of the IRS particularly hard.

For now, the IRS says, while it agrees auditing more wealthy taxpayers would be a good idea, without adequate funding there’s nothing it can do. “Congress must fund and the IRS must hire and train appropriate numbers of [auditors] to have appropriately balanced coverage across all income levels,” the report said.

Since 2011, Republicans in Congress have driven cuts to the IRS enforcement budget; it’s more than a quarter lower than its 2010 level, adjusting for inflation.

Recently, bipartisan support has emerged in both the House and Senate for increasing enforcement spending, but the proposals on the table are relatively modest and would not restore the budget to pre-cut levels. However, even a proposed small increase might not come to pass, because it’s unclear whether Congress will actually pass any appropriations bills this year.

In response to Rettig’s letter, Wyden agreed in a statement that the IRS needs more money, “but that does not eliminate the need for the agency to begin reversing the alarming trend of plummeting audit rates of the wealthy within its current budget.”

 

Blessed Are the Poor

Blessed Are the Poor

The latest statistics from the U.S. Census Bureau about poverty are heartbreaking. How is it possible that, in one of the wealthiest nations on Earth, 1 out of 6 people are living below the poverty line? Many of us will never have to know what it feels like to be poor (thank God). But when so many people in our cities and neighborhoods are in the grips of poverty (especially blacks, Latinos, and children), we need to pay attention and take it personally.

I remember being in a tight financial situation in college. I was a sophomore renting a room from a family in my church. I grew up poor and was the first in my family to go to college. Fortunately, the family I lived with during my freshman year shared my precarious situation with their friends before they moved. They knew that my chances of finishing college were slim without additional help. I was always struggling to work, carry a full class load, and eat. One anonymous person made a deep impression on me through her unexpected generosity. Every few weeks, I would randomly receive a check from this person with a note that said, “God told me to send this to you.” The checks usually came when I was at my lowest point. When they came, I cried out of sheer joy and relief. Years later when I inquired about my anonymous benefactor, I discovered that she was a single, middle-aged woman living on a fixed income.  At first I felt guilty — this woman who had very little sacrificed to support someone she didn’t even know — but then I felt a sense of awe. This woman gave out of her scarcity in a way that challenged my ideas about wealth, prosperity, and poverty. Ever since, I have followed her example in helping others.

As I have matured in my understanding of the Bible, I have noticed that God rarely extols a person simply because of his or her wealth. For wealth to be meaningful, wisdom has to be nearby. If not, we can end up like many celebrities and lottery winners: miserable. Solomon demonstrated this when God gave him a choice between wisdom and riches. He chose wisdom, but God blessed him with both. And his later life is a cautionary tale on the connection between wealth and pride. Godly wisdom is the sure sign of God’s blessings. We have it backward, which is why we forget that God can give His wisdom to anyone — even those we consider poor. 

God’s Concern for the Poor

According to the new census report, 46.2 million Americans are now living in poverty, the largest on record dating back to 1959 when the census began tracking poverty. This has considerable political implications considering the uptick in the unemployment rate and the debt ceiling legislation that just passed.

Defining poverty is not an exact science. For instance, by current standards, a white family of six would be considered poor even though they may make $50,000 a year combined, own their home, and live frugally. Yet the face of poverty in the U.S. media is usually a black single mother with children. Politics and election cycles often decide how the media will see poverty.

In his book Just Generosity, theologian Ron Sider makes it clear that there is room in God’s economy for the less fortunate. He points us to the Old Testament, where Yahweh charges the Israelites to remember where they came from and care for those who need help within their community. Once they settled in Canaan, the concept of gleaning (leaving leftover crops for the poor) in Leviticus 19:9-10 and the Year of Canceling Debts in Deuteronomy 15: 1-6 applied to everyone. Jesus said he came to preach the good news to the poor. There are many other scriptures that support God’s concern as well. 

The Widow’s Example

The crazy thing about wealth is that as we accumulate more of it, we typically find ourselves becoming ever more desperate to preserve it. We may not even be greedy or materialistic people. But the natural instinct is to get as much as we can, and then hold on to it. This is one reason why people with great wealth are rarely as happy as you’d expect.

One of the best antidotes to spiritual discontent is giving. And, paradoxically, it’s often those with the least who give the most. According to a variety of recent studies, lower-income Americans are the most charitable persons in our country. But our media would have us believe that the most generous people are the wealthy. Don’t get me wrong. I’m thankful when a Bill Gates or a Mark Zuckerberg donates millions to education or a third-world country. But I’m even more encouraged by my high school students who took up a collection to help a classmate’s family with funeral expenses. Most of them come from impoverished communities. This is one reason why the story of the widow’s offering in Luke 21:1-4 should have relevance for us: the widow sacrifices exorbitantly while the rich hoard their wealth.

Those who don’t have a lot have recognized the simple wisdom that God loves a cheerful giver and that He truly provides. The anonymous woman who helped me get through college believed this. And today’s Christians, along with our current crop of politicians, should work harder to remember this as well.

In part two of this post, I’ll share some ways that we can learn from those who are living in poverty. Please stay tuned, and share your thoughts about poverty, wealth, and generosity in the comments section below.